This February, we say goodbye to the penny. For Canadian taxpayers, it simply doesn’t made sense to make cents anymore.
Pennies sit idle in jars and coffee cans on our dressers and in our closets. They consume too much of our small business owners and retailers’ time, for too little in return. And they cost too much for taxpayers – 1.6 cents per penny to be exact.
Taxpayers deserve better – and they are now getting better. As announced last year , the penny will be phased out starting February 4th when the Royal Canadian Mint will cease distributing them. With this, Canadian taxpayers will save $11 million each and every year as pennies are fully phased out.
As part of this penny-less reality, Canada will move to a new ‘rounding’ system – much like Australia, New Zealand, Sweden, and the many other countries that have long-ago and successfully eliminated their penny.
How will ‘rounding’ work?
Cash payments will need to adapt when pennies are not available. As time passes, businesses will simply not have pennies and, at the same time, customers will run out of pennies to pay with.
To deal with this, the Government is encouraging all businesses to round cash transactions. Moving to this ‘rounding’ system means that cash payments should be rounded symmetrically – a successful practice that has become normal in countries that have eliminated their pennies. Symmetrical rounding means that final cash amounts (i.e. after tax) and the change owed:
• ending in 1, 2, 6 and 7 cents are rounded down to the nearest 5 cent increment;
• ending in 3, 4, 8, and 9 cents are rounded up to the nearest 5 cent increment;
• ending in 0 cent and 5 cents remain unchanged.
It’s important to remember that this will only affect payments in cash. That means debit cards, credit cards, payment cards and cheques will not be impacted at all and will continue to be settled to the exact cent.
Finally, the penny will retain its value indefinitely – meaning consumers can use pennies for cash transactions with businesses that choose to accept them, or cash them in at their local bank or credit union.
Consumers and businesses with questions about rounding and looking for more information on the phasing out of the penny can turn to: fin.gc.ca/1cent/index-eng.asp or call toll-free 1-800-O-Canada (1-800-622-6232).